Wednesday, 08 July 2020 / Published in Uncategorized

As the Covid-19 Pandemic continues to hit the U.S. economy, businesses are struggling to maintain afloat. As a result, consumers, who are now either unemployed or dealing with cuts in pay are having to reprioritize what goods and services to consume. This has led to a surprise growth in some business sectors, while others continue to deal with dropping demand.

The new challenges posed by the Covid-19 Pandemic are being overcome through the implementation of ingenuity: creating new business strategies. Businesses that are implementing new business models are expected to see increased sales, despite restrictions local authorities have enacted to reduce the spread of the Coronavirus.

There are already several business sectors that are implementing new strategies, including:

  • Restaurants :
    – If consumers cannot dine at the facility, restaurants are now offering online ordering and delivery service.
    – Groceries and paper goods can now be purchased at many restaurants.
  • Businesses with more than 50 employees (including large, multinational corporations) are enabling their employees to work from home by setting up home offices.
  • Furniture stores, seeing an increase in the need for office furniture as more workers are working from home, have increased inventory and are providing quick delivery of office equipment to employees homes.
  • Grocery stores have begun offering both curb side pickup and same day delivery of grocery items .
  • Telehealth – With the use of a wide variety of modern technology and services, healthcare professionals can now impart non-clinical services, such as provider training, administrative meetings, and continuing medical education, in addition to clinical services, to organizations worldwide.
  • Telemedicine –Health care professionals are now utilizing telecommunications (computer or mobile phone) to evaluate, diagnose and treat patients remotely. This trend is quickly becoming part of the new norm in medical care.

Lastly, small businesses should remember to continue implementing that magic ingredient that keeps clients coming back: Good customer service and personal interaction ! Always remember these four steps:

  1. Put yourself in the place of the consumer: be ready to provide not only great service, but respect any precautions that the client may follow at home.
  2. Be honest with consumers: Offer solutions to what they truly need.
  3. Go the extra mile. Understand that we are all in the same boat, trying to get past this pandemic. Clients are feeling what you feel. And,
  4. Keep in contact with clients (email, social media). Let them know you are there if they need you.

In the wake of these unprecedented times, the world economy is changing the landscape of how we conduct business, and in retrospect, is expected to last beyond the Covid-19 pandemic. Particularly as businesses begin to save on office rental costs, consumers save time by having groceries ready for curb-side pickup, and even virtual doctor visits becoming more common, the full potential offered by digital communication in the form of e-commerce will finally reveal itself.

For additional reading:

  1. https://colemanreport.com/main-street-monday-the-impact-of-covid-19-on-small-business-retail-opportunities
  2. https://www.mainstreet.org/blogs/national-main-street-center/2020/07/02/covid-19-and-the-impact-of-retail-part-2?utm_source=July+6%2C+2020%2C+Daily&utm_campaign=061319+Daily&utm_medium=email
  3. https://www.mainstreet.org/blogs/national-main-street-center/2020/06/30/covid-trends-and-the-impact-on-retail?CommunityKey=c40a84d1-46b2-465c-985c-c08ed69081ab&tab=.
  4. https://www.sarasotamagazine.com/news-and-profiles/2020/04/these-restaurants-are-selling-pantry-and-grocery-items-take-out-style
  5. https://chironhealth.com/blog/telemedicine-vs-telehealth-whats-the-difference/#:~:text=Telemedicine%20is%20a%20subset%20of%20telehealth%20that%20refers,clinical%20services%20to%20patients%20without%20an%20in-person%20visit.
  6. https://chironhealth.com/telemedicine/what-is-telemedicine/
  7. https://www.msn.com/en-us/money/other/how-to-rethink-your-business-model-post-covid-19/ar-BB14LFnN
Monday, 06 July 2020 / Published in Uncategorized

Small business owners were given an extra reason to celebrate July 4th, as President Trump signed into law an extension of the SBA’s Payment Protection Program into law. Small business owners now have until August 8th to apply for a small business loan to meet employee payroll, rent, utilities, and other expenses. The original deadline to apply for the PPP loan assistance was this past Tuesday, June 30th.

With over $130 Billion left in funds from the approximate $660 Billion approved for small businesses, Congress would have had to reallocate the funds elsewhere had the original application deadline not been extended. Provided small business utilize 60% of the funds to cover employee’s payroll, the loans can be forgiven, essentially becoming a grant.

When Congress reconvenes on July 20th following a two week recess, it must then decide how to allocate the remaining budget before the new filing extension ends on August 8th. The new PPP deadline extension also grants Congress time to draft another, more refined economic relief package aimed at assisting businesses impacted the hardest by the economic crisis as a result of the Coronavirus Pandemic .

Additional Information:

  1. Sara Hansen, Forbes Magazine : https://www.forbes.com/sites/sarahhansen/2020/07/04/trump-signs-ppp-extension-bill-giving-small-businesses-another-5-weeks/#14e5239e59bf
  2. Matthew Schwartz, NPR: https://www.npr.org/2020/07/04/887322386/trump-signs-small-business-loan-program-extension
  3. See above.
  4. https://www.washingtonpost.com/us-policy/2020/07/06/congress-departed-two-week-recess-without-addressing-coronavirus-spikes-economic-strains/
  5. Sarah Westwood and Phil Mattingly, CNN Politics: https://www.cnn.com/2020/07/04/politics/trump-ppp-extension/index.html
Thursday, 02 July 2020 / Published in Uncategorized

DRDA’s President, Mr. Douglas A. Dickey, CPA, CEPA, was spotlighted this week in Houston’s news publication “Houston Business Journal.” Mr. Dickey covered the current economic crisis that most small businesses in the U.S. have experienced due to the Covid-19 Pandemic and how the Small Business Administration’s Paycheck Protection Program has currently aided more than 4 million small businesses from closing their doors.

The SBA’s PPP program originally set out for small businesses to utilize loans within an eight week span, the timeframe that the U.S. government officials expected the pandemic t last. However, the pandemic has extended further than anticipated. “This PPP was designed to survive for a 90-day period of time — 60 days of stay-at home, 30 days to ramp back up,” Mr. Dickey said. “That doesn’t seem to be happening, so now what do we do?”

In order to extend economic relief to small business, Congress passed the Paycheck Protection Program Flexibility Act in June. Businesses are now permitted to extend the use of the funds received from extended from eight to 24 weeks, and utilize 40% of the loan to cover non-payroll expenses. This is particularly helpful for business that remain closed. “If your business is completely shut down and you’re not making any money, you’re going to have some rent costs, you’re going to continue to have note payments,” explained Mr. Dickey. “You’ve got ongoing costs, but you’ve got no income coming in.”

Read the entire article here.

Thursday, 02 July 2020 / Published in Uncategorized

Set to expire at midnight on Tuesday, June 30th, the U.S. Senate decided to extend the Small Business Administration’s Paycheck Protection Program for small businesses until August 8th. The program was set to close down Tuesday night with $130 billion in funding left over. The bill has passed the House & Senate, and is awaiting the President’s signature. Small business owners have until August 8th to apply for the program.

The Small Business Administration (SBA), which runs the program with the Treasury Department, was set to stop accepting new applications on Tuesday, June 30th, at 11:59 p.m., Eastern Time. With over $130 Billion left in funds as of Saturday, June 28, the unused portion was set to return to the U.S. Treasury Department, unless Congress allocated the funds elsewhere. Of the $650 billion allocated to help small businesses, just over $520 Billion in loans were approved and issued to nearly 4.9 million small business by Tuesday night, the SBA said.

Sen. Ben Cardin, D-Md., who presented the bill extending the filing deadline, stated “We thought by the end of June that our economy would be on track and we would not need to have additional applications after that date.” The Paycheck Protection Program, referred to as PPP, is designed to offer loans to small businesses to cover expenses, including employee salary during the economic crisis caused by the Covid-19 Pandemic. As Sen. Chris Coons (D-Del.) points out: “There are millions of small business that are barely open now. With the likelihood of either renewed closures or much slower reopening, we have literally millions of small business nationwide at risk.” With the Covid-19 crisis still looming over most of the country, and with fall and winter around the corner (not to mention a heavily active hurricane season forecast), signs of financial stability rebounding to pre-Coronavirus levels by the end of the year remain bleak.

One of the great benefits of the SBA’s Paycheck Protection Program is that the loan amount granted to small business owners to keep their business open and employees from losing their jobs, if utilized according to SBA Guidelines, do not have to be repaid. Hence, the loan converts into a grant. This eases pressure on small business as they struggle to generate revenue to keep afloat. With many small companies struggling to keep open, the government assistance offered via the SBA is a welcomed relief.

For Additional Information, see:

  1. https://www.politico.com/news/2020/06/30/senate-small-business-346412?cid=apn
  2. https://www.cnn.com/2020/06/30/politics/paycheck-protection-program-extension-passes-senate/index.html
  3. https://www.msn.com/en-us/news/politics/senate-passes-extension-of/ar-BB16bih4
Tuesday, 19 May 2020 / Published in Business Lending, Small Business

Small Businesses who received Paycheck Protection Program loans can prepare for the process of having the debt reduced or even wiped clean with the forgiveness application released by the Small Business Administration on Friday May 15,2020.

SBA said it planned to release official regulations and guidance soon. But the form might help employers by offering reminders of the rules as well as what appears to be some new guidance on how the government will handle loan forgiveness.

According to a SBA news release Friday: 

The form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:

• Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles

• Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan

• Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness

• Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30

• Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined (Minor formatting edits.)

“The Treasury Department and Small Business Administration released a loan forgiveness application form for the CARES Act’s Paycheck Protection Program (PPP), which had been urgently sought by CPA firms and their small business clients in recent weeks,” the American Institute of CPAs wrote in a news release Saturday. “The document and related instructions partially address some outstanding issues but leave others unaddressed and, more importantly, still do not provide enough flexibility for those who receive funds, according to the American Institute of CPAs. Download the PPP Forgiveness Loan calculator from the American Institute of CPAs.

The SBA opened the PPP process on April 3. Small Businesses who managed to obtain the PPP loans in the early days of eligibility are coming up on the eight-week (current to 6-7 weeks in) “Covered Period” to have spent the money, which means some might want to get the ball rolling on the forgiveness process for peace of mind. (The deadline to apply for forgiveness is unclear, but the form carries an Oct. 31 expiration date.) Otherwise, the loans carry 1 percent interest and mature in two years.

The eight-week “Covered Period” starts ticking either on the day you received loan dollars, but the feds say they’ll also allow employers to key off of their first pay period after receiving the loan — within limitations. For example, the 25 percent of the loan which can be spent on eligible non-payroll costs like rent must have been spent during the “Covered Period.”

“For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the ‘Alternative Payroll Covered Period’). For example, if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20,” the form states. “Borrowers who elect to use the Alternative Payroll Covered Period must apply the Alternative Payroll Covered Period wherever there is a reference in this application to ‘the Covered Period or the Alternative Payroll Covered Period.’ However, Borrowers must apply the Covered Period (not the Alternative Payroll Covered Period) wherever there is a reference in this application to ‘the Covered Period’ only.”

The government will also accept the spending if costs are incurred during the time frame and paid by the first payday or billing date after it.

“Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred during the eight-week (56-day) Covered Period (or Alternative Payroll Covered Period) (‘payroll costs’),” the form states. “Payroll costs are considered paid on the day that paychecks are distributed, or the Borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period (or Alternative Payroll Covered Period). …

“An eligible nonpayroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. Eligible nonpayroll costs cannot exceed 25% of the total forgiveness amount. Count nonpayroll costs that were both paid and incurred only once.”

The government will forgive the loan and any interest if at least 75 percent of the money received had been spent on payroll and the remainder spent on rent, utilities or mortgage interest, according to the form. The maximum forgivable amount per employee maxes out at what would work out to $100,000 a year in pay.

The amount forgiven will be decreased proportional to the drop-in workforce and potentially pay. The government will let pay cuts slide if employees made at least 75 percent of what they averaged between Jan. 1 and March 31 or were paid between Feb. 15-April 26, the average salary or hourly wage they were making as of Feb. 15, according to the new form. Borrowers that cut pay more than the government would like can receive a pass if they restore paychecks to Feb. 15 levels by June 30.

The government also will let layoffs slide and forgive the full loan if you laid off people between Feb. 15-April 26 and brought your workforce to Feb. 15 levels by June 30, according to the form. It also grants an exemption to an employer who fired employees for cause or “made a good-faith, written offer” to rehire a worker only to have the employee decline. Exemptions also exist if the employee quit voluntarily or asked for their hours to be reduced. “Any FTE reductions in these cases do not reduce the Borrower’s loan forgiveness,” the form states.

Congress appropriated hundreds of billions for PPP small business loans over the course of two separate bills, resulting in a PPP “Phase One” and “Phase Two.” The forgivable loans were seen as a means of helping small businesses preserve jobs after the national COVID-19 coronavirus response shattered the economy.

PPP “Phase One” saw another more than $342 billion net dispensed in nearly 1.7 million loans made by 4,975 lenders, according to the SBA. The average “Phase One” loan came out to $206,000. Nearly 26,000 loans exceeding $2 million had been issued in Phase One; these represented 1.57 percent of the loan applications approved, but nearly 28 percent of the loan dollars.

After the PPP program ran out of money (lawmakers approved $349 billion), Congress approved more funds for what became “Phase Two.” Generally speaking, you can borrow the equivalent of 10 weeks of payroll.

As of 5 p.m. Saturday May 16,2020, 5,479 “Phase Two” lenders had issued nearly $195.2 billion across nearly 2.8 million loans. The average “Phase Two” loan worked out to $70,622.

More information:

PPP loan forgiveness application and instructions

Small Business Administration, May 15, 2020

“AICPA Says Treasury and SBA PPP Loan Forgiveness Application Leaves Many Questions”

American Institute of CPAs, May 16, 2020

SBA “Coronavirus Relief Options” page

SBA Paycheck Protection Program (PPP) webpage

List of PPP lenders in your state

Paycheck Protection Program FAQs

SBA, May 13, 2020

Friday, 24 April 2020 / Published in Business Lending, Small Business, Tax

DRDA continues to provide you information as quickly as we can related to any tax law changes, as well as financial aid and loan opportunities as a result of the COVID-19 crisis. As you can imagine, this is a rapidly changing environment and we will continue to disseminate information as it is made available to us.

On March 27th 2020, President Trump enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act to Help small businesses keep workers employed through a program known as the Paycheck Protection Program (PPP). Which allowed banks to issue SBA 100% federally guaranteed loans to small businesses that can attest to suffering economic hardship as a result of the COVID-19 crisis. Importantly, these PPP loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payroll afterward.

Yesterday April 23, 2020 Congress approved an additional $310 billion in Funding to replenish the PPP Program which has run out of money. Congress had allotted an initial $349 billion in the last relief bill, a $2.2 trillion package enacted on March 27, only to see the funds run dry shortly afterward due to the rush of businesses seeking to tap the benefits.

Banks will start processing application Monday April 27, 2020. We anticipate the money to move very quickly. We suggest to those applying for the PPP, to do so as soon as possible, and be ready to submit their applications immediately as the program becomes available.

Here is a link to a small business guide published yesterday by the U.S Chamber of Commerce. Please take the time to read this memo, and if you believe your business qualifies (if you need help in that determination, please let us know), then you need to contact your banker to start the process. Please keep in mind, these loans are moving very fast and they are being created as a “first come, first served” priority list for applicants. This will typically be a bank process, not an accounting process, so submitting a loan application through your bank will be of the utmost importance.

The last twelve (12) months payroll information will be needed. It is our understanding at this time, that payroll will include wages, employer paid payroll taxes, health insurance premiums and retirement expense (i.e. 401(k) match).
As stated previously, for the PPP loan to be forgiven your business will have to prove that it retained and continued to pay employees. The rules are still evolving regarding the employee retention provision but understand that employee retention is paramount to having this loan forgiven.

The administration’s PPP program guidelines can be found at www.treasury.gov, and the U.S. Small Business Administration’s search tool to find a bank that offers PPP loans can be found at www.sba.gov/paycheckprotection/find.

We hope that you are well, and please stay safe. Please don’t hesitate to contact us with any questions you may have.

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